Paul Barber: Why the Albion lose £1m a month

[Stat Brother]

Some of them also spoke of initiatives to get fans into the ground, including one club who for one match said to fans 'pay what you want'. I'm not convinced this would work at the Amex (as the club pay for travel costs and it is to a large extent a cash free ticket purchasing process) but if done once a season, perhaps on a child and adult basis, would generate interest, food, drink and shirt revenues, and perhaps ensnare some new fans.

The initiative that got my attention was Warsaw's (I think)

A lower division team has, like us, very cheap season tickets for the juniors.
But what they do is give a couple of pounds cash back when the child is in attendance.
Usual that money still gets spent at the club.

 

[spanish flair]

I was one of those that voiced their concerns about the £12 million he talks about and I think the term I used was that I was "terrified" to hear we were losing so much.
Well around June/July time last year, he told us that we have unsustainable debts of over £8 million a year and that he had plans in place to reduce and control these debts. Now he is telling us it is £1 million a month, so what went wrong with his plans and if £8 mill was unsustainable how long can we go on losing £12 mill. That is what I would like PB to explain.

http://notworththat.wordpress.com/2...g-and-why-the-club-does-value-its-supporters/

Very few football clubs make money. Most operate at a loss, even in the Premier League. There are many reasons for this. We are losing well in excess of £8m a year. Clearly, investment in players and in other football areas accounts for a large proportion of any club’s costs. We are no exception.

And this is important because our current losses are not sustainable. Growing revenues in all areas including ticketing, match day spending, sponsorship, and non match day activities will be even more important in the coming season. Financial Fair Play – and, yes, I know this may sound boring! – requires us to increase sales and reduce costs as quickly as possible. If we don’t, our losses will affect our ability to invest in the football side of our business

 

[El Presidente]

Let's hear it then. Your starting point is where we are currently: in the Amex with c22,000 season ticket holders, a strong squad commanding decent wages and ongoing operating losses.

Tell us where the club should be and how you would get it there.

Charge 10p less per pie, job done!

 

[El Presidente]

Good spot!

I'm led to believe that there could be changes afoot to both FFP rules and parachute payment distributions that could be very beneficial to a club run in the way the Albion is. We'll have to wait and see...

Could this involve Sky Sports cameras talking to an ex-England managerial candidate from his car window extolling the virtue of someone being a 'lovely lad', and saying his team were 'triffic' today, despite the 4-0 home defeat to Newcastle?

 

[Publius Ovidius]

Has no one got an answer to my question about an investor wanted to put in £50 million and if they are supposedly allowed by FFP?

 

[El Presidente]

To be honest it's not FFP that is the problem, in fact that is very commendable and in the ideal world would go further.

This is the point I disagree with strongly. FFP protects the rich, and is a barrier to competition, so why should it go further?

 

[easynow]

Mr Barber,

Would you rather fight a horse- sized seagull or 100 cat sized seagulls?

Cheers,
EN

 

[hans kraay fan club]

or 100 cat sized seagulls?

So, um, regular seagulls, then?

 

[Bozza]

Has no one got an answer to my question about an investor wanted to put in £50 million and if they are supposedly allowed by FFP?

I don't believe for a second they can otherwise clubs would not be trying to engineer dodgy inflated sponsorship and commercial deals to inject cash into clubs.

It's probably a flaw in FFP rules that it can't happen. The rules are intended to limit both losses and potentially fatal debts developing. If benefactors and well-wishers want to gift a club some no-strings-attached cash then it should probably be allowed. It is one of the changes I have heard may come to fruition.

 

[Psychobilly freakout]

Yesterday, Paul Barber wrote a long-detailed note addressing some concerns that Albion fans had expressed on NSC about the running of the club and the state of the club's finances. Some fans thought he had skipped the question as to why the club was losing in the region of £1m a month, so he's had another go:


Most Championship clubs lose money. Unfortunately it has been this way for many years and, although FFP is partially controlling and ultimately capping the issue, losing money in the Championship will continue to be the case for most clubs for some time to come.

This is because the combined pot derived from club controlled revenues (made up of ticket and hospitality revenue, merchandise sales, catering, events and sponsorship sales etc) PLUS central revenues from the Football League (made up of TV and sponsorship revenues and what's known as solidarity payments from the Premier League) simply do NOT add up to enough to fund a promotion-chasing football budget - and this is after some very aggressive operational cost management and reduction across the entire club.

It is why supporters always hear me bleat on about the disparity created by parachute payments as those relegated PL clubs benefit from nearly all of the above revenues (they don't currently get the PL solidarity payments) - their own and the Central Football League derived monies AND they also have the benefit of (this year) £20million+ worth of parachute payments (in year 1 alone).

To compete with this extreme level of disparity we, as a club that has never benefitted from any parachute payments, must rely on Tony to supplement our revenues in order to generate a playing budget that enables us to build a competitive squad. The alternative is that we lower our ambitions, reduce our losses far quicker and reduce our football operations budgets. However, as I've said previously, this strategy does not match our club's ambitions nor that of our chairman nor, I believe, of the vast majority of our supporters.

At the same time, and to minimise the need to allocate the playing budget we do have against transfer fees, we have invested in a world class academy facility and the coaching and technical talent it needs in the hope and belief that we will develop great young players for the future, either for our own first team or to sell on to different clubs in a variety of different circumstances thereby topping up our revenue pot from a different stream. This doesn't make us a "selling club" - players may develop with us and move on for a variety of reasons - and neither does it make us a "non buying" club; there will always be talent we need to buy in and we will always budget for that.

FFP adds another dimension to the mix because it puts a finite limit on the amount Tony can contribute in the meantime. I know some supporters scoff at FFP but, whilst these rules may change - and I expect them to - they aren't going away any time soon so we must take them seriously and comply.

All of this is why I am so obsessive about generating as much of our own revenue as possible - why I do want supporters to eat and drink at the stadium, why I do want fans to buy our merchandise, and why we need supporters to direct as many non-match day events as possible our way - and why I'm equally obsessive about reducing our operational costs, cutting waste, getting better supplier deals, and making the club more efficient because it's the only way that we can maintain a competitive playing budget without breaking FFP regulations.

Now that I can understand and see where the club are coming from and can only sympathize with the club working under FFP and against teams willing to break the rules and against parachute payments. Hard task indeed. Thank you Paul

 

[seagullsovergrimsby]

Good spot!

I'm led to believe that there could be changes afoot to both FFP rules and parachute payment distributions that could be very beneficial to a club run in the way the Albion is. We'll have to wait and see...

Just as long as there isn't an amnesty for those clubs who stuck two fingers up to FFP last season.

 

[easynow]

So, um, regular seagulls, then?

You have a point. Ok...

Mr Barber,

What shower gel do you use?

Regards,
EN

 

[Publius Ovidius]

I don't believe for a second they can otherwise clubs would not be trying to engineer dodgy inflated sponsorship and commercial deals to inject cash into clubs.

It's probably a flaw in FFP rules that it can't happen. The rules are intended to limit both losses and potentially fatal debts developing. If benefactors and well-wishers want to gift a club some no-strings-attached cash then it should probably be allowed. It is one of the changes I have heard may come to fruition.

Which then brings me back to the point, if PB says that in effect TB is bankrolling a huge loss making club, what would we think of another " investor" coming in with substantial funds. Especially as with the ground and national coverage we seem to be flavour of the month.

I suppose more importantly, what would TB think!

 

[Dick Knights Mumm]

Which then brings me back to the point, if PB says that in effect TB is bankrolling a huge loss making club, what would we think of another " investor" coming in with substantial funds. Especially as with the ground and national coverage we seem to be flavour of the month.

I suppose more importantly, what would TB think!

Let's be content with the fact we have a chairman with deep pockets who loves our Club. We have seen enough of the chancers who circle around clubs looking for a fast buck or to launder their dirty money.

 

[Bozza]

Which then brings me back to the point, if PB says that in effect TB is bankrolling a huge loss making club, what would we think of another " investor" coming in with substantial funds. Especially as with the ground and national coverage we seem to be flavour of the month.

I suppose more importantly, what would TB think!

You've talked about two different things though:

1. Someone gifting the club, say, £50m. That wouldn't be an investment, just a very generous present. I doubt anyone would have any reservations in accepting a lump sum cash boost to the coffers.

2. An "investor" would want something in return, likely equity and a seat on the board. That's a very different thing.

 

[KZNSeagull]

Has no one got an answer to my question about an investor wanted to put in £50 million and if they are supposedly allowed by FFP?

I believe that the answer is no, it is not allowed. They could invest 50m in youth development, the stadium or other fixed assets or the community scheme, but they cannot give the club 50m to spend on players/wages or other ongoing operational costs.

 

[Dick Knights Mumm]

This is the point I disagree with strongly. FFP protects the rich, and is a barrier to competition, so why should it go further?

It is at best a double-edged sword. It does all that - but if implemented it should also assist the well-run Clubs. Or have I missed something ?

 

[KZNSeagull]

You've talked about two different things though:

1. Someone gifting the club, say, £50m. That wouldn't be an investment, just a very generous present. I doubt anyone would have any reservations in accepting a lump sum cash boost to the coffers.

2. An "investor" would want something in return, likely equity and a seat on the board. That's a very different thing.

There has to be a limit on gifts though. What's to stop the same person gifting the club 50m every season?

 

[Marty___Mcfly]

What do people think the club would be doing if FFP didn't exist? I would suggest similar to what they are now. The alternative is to spend more cash on players and roll the dice- one year (or more) in the Prem would deliver a huge financial return. But it's a gamble, and ironically, I don't think the owners are up for it.

So all this talk of FFP is really a smokescreen, it's easier than the club just admitting that they don't want to put the money in to take the gamble to push for a promotion which may not happen, no matter how much you spend. So rather than say 'We want to be sensible, and we don't want to spend the cash it would take to push for 1st/2nd place, and we have our fingers crossed we might hit sixth and do something in the playoffs', which would be honest, we get a load of babble about FFP and how the club are doing what they can within the confines of this regime.

The reality is, on paper, spending the cash, getting promoted, and paying any FFP fines due would still deliver a massive increase in income for the club and there is nothing to suggest they couldn't move on from that and either become a stable club in the Prem or Yo-Yo between the Prem and The Championship raking in parachute payments as they go. It's a viable strategy, it's got risks and those risks would need to be managed.

The current strategy is less risky but very unlikely to deliver Promotion.

 

[KZNSeagull]

This is the point I disagree with strongly. FFP protects the rich, and is a barrier to competition, so why should it go further?

True.

But if it brings the wages of the less good players down to a level that more clubs can afford them, that would increase competition below the rich surely? I think we can assume that the top 7/8 clubs in the PL are way above everybody else and can be effectively ignored for the short term - no-one is going to break into that little club for a long time.